Inflation Data Rebounds, U.S. Treasury Yields Rise Rapidly
With U.S. June CPI data exceeding market expectations, the market reacted swiftly, and the yield on the 30-year U.S. Treasury bond surpassed the 5% psychological threshold for the first time, hitting a six-week high. This data rebound not only indicates that inflationary pressure has not receded but also suggests that U.S. trade policy may be continuously supporting prices through a "tariff transmission mechanism."
The data shows that the Consumer Price Index rose 2.7% year-on-year, the largest increase since February, and although the core CPI was slightly below expectations, it still showed a trend of sustained moderate growth. At a time when monetary policy is highly sensitive, this set of data prompted investors to reassess the potential policy path of the Federal Reserve.
Trade Policy Effects Emerge, Tariff Impact Unignorable
The rise in this round of inflation data is not unrelated to the Trump administration's recent acceleration in imposing widespread tariffs. Analysts point out that the continuously expanding tariff coverage, especially in areas involving medical supplies, electronic components, and consumer goods, has begun to show an impact on prices.
For a long time, tariffs have been considered to have the characteristic of "imported inflation," especially in the context of globalized supply chains, where cost increases are often ultimately passed on to end consumers. The market is gradually realizing that the inflationary pressure is not only a result of demand factors but also structural distortions caused by policy shocks.
Policy Interference Intensifies, Fed Faces Complex Situation
After the inflation report was released, Trump quickly called for a sharp interest rate cut on social media, even proposing a rate cut of "three percentage points." Although such statements are consistently extreme, his frequent interference with the Fed's independence has raised market concerns.
JPMorgan Chase CEO Dimon spoke out again, emphasizing the importance of Federal Reserve independence to the financial system. He noted that political interference often leads to a loss of credibility in monetary policy, thereby weakening the market's confidence in combating inflation. As rumors about Powell's retention heat up, the Fed's operational space is increasingly being disrupted by non-economic factors.
Rate Cut Expectations Cool Rapidly, Markets Respond Lukewarmly
Facing higher-than-expected inflation data and presidential-level political interference, the Federal Reserve is under dual pressure regarding its future monetary policy path. The CME FedWatch tool shows that the probability of maintaining rates unchanged in July has risen to 97%, while the likelihood of a rate cut in September has fallen to about 50%, far below previous levels.
Meanwhile, both the U.S. stock and bond markets came under pressure after the release of CPI data, with investors waiting for further confirmation signals on whether the Fed will maintain a cautious stance. Institutions generally predict that the Fed may focus more on the interaction between inflation trends and global supply chain changes, rather than short-term political voices.
Policy Stability Becomes Market Focus
In the coming weeks, PPI, employment reports, and consumer spending data will become important references for Fed observation. At the same time, the direction of trade policy and its impact on the price chain remain the core focus of the market.
Investors generally believe that if the Federal Reserve wants to maintain policy authority and market confidence, it needs to adhere to a data-driven approach amid political storms, avoiding the pitfalls of short-term populist demands. In the short term, financial markets will enter a new round of volatility around adjustments in inflation expectations, U.S. Treasury yields, and Fed meeting minutes.
